FOMC officials strike a more dovish tone towards future rate hikes
FOMC turn dovish
The Federal Open Market Committee kept US interest rates unchanged as widely expected this week and shocked market participants with a much more dovish policy statement than expected. The FOMC removed hawkish commentary from its monetary policy statement and talked down future US rate hikes, as they noted a worsening global outlook and persistently below trend US inflation. The FOMC also said that they could adjust the Federal Reserve’s balance sheet, this was seen as a hint to investors that US policymakers could cut US interest rates if needed. The initial market reaction saw the US dollar index fall and US equity markets gaining broadly, as investors digested the Federal Reserve’s more dovish stance.
- The EURUSD pair is strongly bullish while trading above the 1.1460 level, key resistance is found at the 1.1500 and 1.1570 levels.
- If the EURUSD pair trades below the 1.1460 level, further losses towards the 1.1410 and 1.1360 levels remains possible.
The British pound eased lower against the US dollar and the euro this week, as British PM Theresa May found support for her amended Brexit plan but failed to win support from key EU officials. PM May secured the backing of UK lawmakers in parliament on Tuesday, after making key concessions on the Northern Ireland border issue. The GBPUSD pair fell towards the 1.3055 level as EU officials defiantly rejected talk of a new deal, further reminding investors that the UK could still leave the EU without a deal by March 29th if Brusells rejects PM May’s latest proposal.
- The GBPUSD pair is bullish while trading above the 1.3000 level, key resistance is found at the 1.3205 and 1.3315 levels.
- If the GBPUSD pair trades below the 1.3000 level, sellers may test towards the 1.2939 and 1.2890 levels.
Gold soared above the $1,300 level this week, as the yellow metal climbed to a fresh eight-month trading high after the Federal Reserve’s mid-week interest rate decision. Gold traded above the $1,325 level, as investors continued to seek out safe-haven asset classes amidst fears of a global economic slowdown and a more dovish Federal Reserve. Spot gold has also been in strong demand due to ongoing fears of a prolonged trade war between the United States and China. Gold closed the month of January in the green by over three per cent and posted its fourth consecutive month of trading gains.
- The XAUSUD pair is only bullish while trading above the $1,290 level, key resistance is found at the $1,365 and $1,400 levels.
- If the XAUSUD pair trades below the $1,290 level, sellers may test towards the $1,279 and $1,265 support levels.
The broader cryptocurrency market came under heavy selling pressure this week, as Bitcoin, Ethereum and Litecoin closed the month of January in the red. Bitcoin fell towards the $3,300 level as market sentiment worsened towards the number one cryptocurrency. Etheruem briefly tumbled below the psychological $100.00 support level, with the third largest cryptocurrency shedding over ten per cent of its market capitalization in early week trade before making a marginal recovery. Litecoin remained fairly muted on the cryptocurrency market, as the LTCUUSD pair traded in a narrow range for most of the trading week as buyers and sellers continued to battle for control of the seventh largest cryptocurrency.
- The LTCUSD pair is only bullish while trading above the $33.00 level, key resistance is found at the $42.00 and $50.00 level.
- If the LTCUSD pair declines below the $28.00 level, sellers may test towards the $27.50 and $25.00 levels.